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Praise where it is due

China may have lots of issues with their economy to deal with – size of the debt mountain in the private sector, shadow banking, eroding competitiveness, decelerating economic growth and capital flight. Yet, they are not losing sight of their long-term goals and vision. That is something that the other wannabe superpower in Asia (India) lacks.

Look at the two recent news-items on how China has inked agreements with Britain and Germany on offshore renminbi trading, clearing and settlement. See the news-stories here and here.

The story that informs us of China’s agreement with Britain has this important nugget:

Standard Chartered Bank developed a renminbi globalization index to measure overall growth in offshore renminbi use. It includes deposits, trade settlements and other international payments, dim sum bonds — Chinese bonds that attract foreign investors — certificates of deposit issued as well as foreign exchange turnover, all from an offshore perspective and denominated in renminbi.

The index initially covered only Hong Kong. Singapore and London were added in August 2011, and Taiwan was added in July 2013. The index doubled last year and has risen by 14 times since the beginning of 2011. [Link]

The Bloomberg story that reports on China’s deal with the Bundesbank in Germany has the following information:

In a sign of closer economic ties between the two countries, China plans to open a fourth consulate in Germany this weekend in Dusseldorf, according to the city’s local chamber of commerce. About 800 Chinese companies have bases in North Rhine-Westphalia, Germany’s industrial heartland. More than 300 of those are in Dusseldorf, where about 2,700 Chinese live, according to the city.

German companies including Siemens AG, the country’s biggest engineering company, and Volkswagen AG are embracing the renminbi internally as a third currency for cross-border trade settlements.

Germany’s financial capital prevailed over Paris and Luxembourg in a euro-area race to win trade in renminbi, which overtook the euro to become the second-most used currency in global trade finance in October, according to the Society for Worldwide Interbank Financial Telecommunication. [Link]